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By Joan Magee
NEW YORK, Aug 12 (IFR) - Argentina's holdout creditors and
international banks are struggling to strike a deal on the
sovereign's debt, sources close to the situation said on
Citi, Deutsche Bank, HSBC and JP Morgan last week offered
the holdouts 40 cents on the dollar for the roughly US$1.66bn
bonds, including interest, they own, and raised that offer to 50
cents on Monday, the sources said.
But that is way below the 80 cents that was first discussed
by banks last week.
"These are not fully-baked proposals," said a source from
one of the holdout firms - hedge funds led by Aurelius Capital
and NML Capital.
"Right now, any and all deal talks are completely dead,
because the bitter public rhetoric of the Argentine government
has killed any such interest on the part of third parties," the
source added, referring to media coverage of Argentina's default
on July 30, its second in 13 years.
"Nobody trusts that Argentina has any interest in a
resolution in any reasonable time frame," the source said.
Argentine bonds dipped 25 cents on average from earlier this
morning, traders in New York said.
Argentina's Boden 2015s were trading at 96.95 mid-market,
while Discount 2033s were spotted at 85.50 mid-market. Bonar
2017s were trading at 92.05 and the Bonar 2024s were at 92.70.
Local press have reported that Argentine billionaire Eduardo
Eurnekian may be putting together an industrial group to buy the
holdout debt, but the source denied Eurnekian had contacted them
with any form of a deal.
Another source at the holdout creditors said they would be
more open to a hybrid of Paris Club and Repsol deals.
In May, Spain's Repsol received US$6bn in bonds as
compensation for the 2012 expropriation of its 51% stake in
Argentina's YPF. That same month, the government said it would
pay US$9.7bn in arrears to its Paris Club of creditors over the
course of five years.
"This likely doesn't have to cost Argentina much, if any,
cash," said the second source. "Bonds can be a major part of the
The Argentine government has clung to the idea that the
so-called RUFO clause, which expires in January, impedes it from
offering better terms to the holdout investors. Such a move
would trigger the RUFO clause and expose it to billions of
dollars worth of claims.
Such a move would trigger the RUFO clause and expose it to
billions of dollars worth of claims, the government says.
Talks between the banks and the holdouts have been going on
for the past two weeks.
Sources close to the banks say talks are still ongoing.
Citigroup, Deutsche Bank and JP Morgan declined to comment,
while HSBC did not respond to requests for comment.
(Reporting by Joan Magee; Additional reporting by Davide
Scigliuzzo; Editing by Paul Kilby and Natalie Harrison)